Myths about Credit Reports And Mortgages

Working in the mortgage industry, I hear a lot of myths floating around about credit reports. Here are some common ones I find interesting.

Myth: Your entire life is encapsulated on your credit report.

Your credit report lists sensitive information such as your social security number, birth date and address. It may also include your previous addresses, and sometimes even your employer.

These reasons alone are why it’s important to keep a credit report confidential because it makes it easier for someone to steal your identity.

Basically, a credit report lists items that are related to debt and not things such as your race and income.

For instance, you may owe a doctor’s office $500 for an outpatient procedure, but the ailment that required you to get the procedure will not be listed. A piece of jewelry you financed for your crazy ex-fiancé may be reported, but his or her name will not.

I think you get the picture.

Myth: Checking your own credit score will decrease your score.

Let’s say you decide to “shop” for a mortgage, which is silly once you have called Florida Mortgage Firm (low rates, low costs and local accountability). Let’s say you went to John Doe Bank down the street and don’t like the terms and rate it offered. You may still be able to have another lender pull your credit.

According to Equifax, which is one of the three largest American credit agencies, “While looking for new credit can sometimes equate with higher credit risk, most credit scores are not affected by multiple inquiries for your credit report from auto or mortgage lenders within a short period of time. Most credit scores treat these as a single inquiry, which will have little or no impact on your credit score.”

I’ve always said that it doesn’t hurt to get a second opinion.

Myth: Married couples have merged credit reports

Each person has his or her own credit report. Getting married or divorced will neither combine, nor split credit reports. So if your husband maxed out his credit line by financing power tools with an account under only his name (not a joint account with your name), then you do not need to worry about your credit report being affected.

I hear people tell me all the time that they cannot get a mortgage because they are divorced and their spouses decimated their credit histories. Even if that is so, don’t assume it will roadblock you from being approved for a mortgage.

Florida Mortgage Firm has helped countless people obtain mortgage financing who were leery because they listened to a myth.